Asset Sale vs Share Sale: What Changes for Funding
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Asset Sale · Share Sale · Business Purchase Funding
The structure changes more than the contract name. It changes where a lender can take security, what may need to be reassessed, which consents or statutory steps can affect settlement, and how much cash the buyer may need on the day. This guide follows those funding consequences from first offer through to the first trading cycle after settlement.
Quick Answer
An asset sale moves selected business assets into the buyer's entity; a share sale changes ownership of the company and leaves its assets, contracts, liabilities and history inside it. For funding, neither is automatically harder: the structure changes the security, diligence, consents, duty and settlement cash.
Also called: asset sale vs share sale, share purchase vs asset purchase, equity sale, sale of shares vs sale of assets.
What actually changes for funding when you buy shares instead of assets?
What changes is what you own when it is over. In an asset sale, the buyer's entity acquires selected assets such as plant, fitout, stock, contracts and goodwill. In a share sale, the buyer acquires ownership of the company and the company's assets stay where they already are. That one distinction changes the security, diligence, consents, duty questions and settlement steps the funding has to work around.
The structure decision itself is legal and tax work for your solicitor and accountant. The funding question is different: once the structure is known, what does it do to the borrower, the security package, the approval assumptions and the amount of cash required to complete? Borrowing capacity, serviceability, deposit and how lenders assess the underlying business are covered separately in the guide to financing a business acquisition.
Where are you in the purchase, and what should you check next?
Most buyers are not choosing between two blank structures. They have found a business, received heads of agreement or a draft contract, and the seller has already put an asset sale or a share sale on the table. The useful question changes as the deal moves.
| Where you are | The immediate question | What to check next |
|---|---|---|
| Looking at a business, nothing signed | Does the structure change what can be financed or secured? | Start with the security section and the side-by-side funding table |
| The seller says it must be a share sale | What history and risk stay inside the company, and what can change the price paid at settlement? | Read the seller-motivation and liabilities sections, including completion accounts, retention and deferred price |
| Heads of agreement or contract is being drafted | Does the financier know which structure it is assessing, and is the finance date realistic for that structure? | Give the broker or lender the proposed structure and contract dates before they are treated as fixed |
| Finance assessment has started | Will a later structure change affect the borrower, security, diligence or settlement conditions? | Read the structure-change section and tell the financier as soon as the structure moves |
| Due diligence is underway | What existing security, contracts, liabilities and change-of-control clauses have to be dealt with? | Read the PPSR, consent and liabilities sections |
| Settlement is approaching | What can still change the amount of cash required or move the completion date? | Read the settlement-cash section covering releases, adjustments, duty, GST and working capital |
If finance will be needed, tell the broker or lender whether the proposed deal is an asset sale or a share sale before the finance condition and settlement timetable are treated as settled. A later change can alter the borrower, the security package, the documents that need review and the conditions that have to be satisfied. If the contract contains a finance condition, the date should make sense for the transaction the financier is actually assessing.
Is a stock sale the same thing as a share sale?
Yes. "Stock sale" is the United States term commonly used for what Australian transactions call a share sale. The words describe the same basic structure, buying ownership interests in the company rather than selected assets out of it. The important warning is jurisdiction: Australian duty, employment and corporate-law consequences do not follow a United States article merely because the transaction label looks similar.
Why does the seller want a share sale, and what changes if they will not budge?
Sellers commonly want a share sale for two reasons: their own after-tax outcome, and the fact that it leaves them with nothing to wind up. In an asset sale the selling entity receives the sale proceeds and may remain in existence afterwards. In a share sale the seller disposes of the shares themselves and exits ownership of the company. The actual tax outcome depends on the seller, the entity and the concessions available, so that part belongs with the seller's accountant rather than this funding guide.
A seller insisting on a share sale is not, by itself, evidence that something is wrong with the business. It does mean the buyer needs to price and investigate a different set of risks because the operating company's existing liabilities and history remain inside the entity being acquired.
That is where the commercial protections become relevant. The price can be adjusted. Completion accounts can true the price against the company's actual debt, cash or working-capital position at completion. Warranties and indemnities can allocate identified risks. Part of the price can be retained or held in escrow. Which protections belong in the contract, and their amount or duration, are questions for the solicitor.
The funding consequence is that the headline purchase price may not be the amount actually paid on settlement day. A completion-accounts adjustment, retention, earn-out, deferred consideration or vendor-finance component can change the buyer's cash contribution and the true capital stack. If a senior financier is involved, disclose those components rather than treating them as a private side arrangement, because the financier needs to understand what ranks beside or behind its debt and how much cash is actually required to complete.
If the parties cannot agree on the risk allocation, the alternative may be a different transaction rather than a different sentence in the same contract. Buying only a stake rather than the whole business is covered separately in the guide to buying part of a business.
What can a lender take security over in an asset sale versus a share sale?
A lender secures the company rather than the things the company owns, which is why a share purchase creates security at two different levels. The buyer can grant security over the shares it acquires. Separately, the target company may grant security over its own business assets. Guarantees or additional property security can sit beside either of those arrangements. Which combination a financier requires is deal-specific.
In an asset sale the chain is more direct: selected assets move into the buyer's entity, so security can be taken in the entity that now owns those assets. In a share sale the trading assets stay inside the target company, while the buyer's new asset is the shareholding. That is why the security analysis has to ask both what did the buyer acquire? and which entity owns the assets the financier wants to secure?
| Funding question | Asset sale | Share sale |
|---|---|---|
| Where do the operating assets sit after settlement? | Selected acquired assets sit in the buyer's purchasing entity | They remain inside the target company |
| Who can grant security over those operating assets? | The entity that acquired and owns them | The target company, because it still owns them |
| Can the ownership interest itself be security? | Not the central asset-sale question | Yes. The acquired shares can themselves form part of the security package |
| Can guarantees or other property security sit beside this? | Yes, depending on the financier and transaction | Yes, depending on the financier and transaction |
| Can target-company support raise another legal issue? | The share-acquisition financial-assistance issue is ordinarily not the asset-sale issue | Yes. A target guarantee or security supporting debt used to acquire its shares can engage Part 2J.3 of the Corporations Act |
This page describes the available mechanics, not a universal lender policy. Public Australian lender material does not establish one fixed security package for every private-company share acquisition. A term sheet can therefore matter more than a generic article: it tells the solicitor which entities, shares, guarantees or property the actual financier proposes to take.
Existing registrations matter as well. A PPSR search can show registered security interests over assets or against an organisation. In a share sale, registrations against the target do not disappear merely because the shareholders change. In an asset sale, registrations affecting the assets being acquired may need to be released or otherwise dealt with at completion.
Can the company you are buying secure the loan you are using to buy it?
It can, but target-company guarantees or security for acquisition debt can constitute financial assistance regulated by Part 2J.3 of the Corporations Act 2001. Section 260A does not create a single mandatory "whitewash" route. It permits financial assistance where giving it does not materially prejudice the company, its shareholders or its ability to pay creditors, where shareholder approval is obtained under section 260B, or where an exemption in section 260C applies.
The current Corporations Act compilation also states that financial assistance may be given before or after the acquisition of shares. That is why it is inaccurate to say that every share purchase must complete one identical process before settlement. The transaction solicitor needs to identify which section 260A route applies to the proposed support and when the security documents can be put in place.
If the transaction relies on shareholder approval under section 260B, the statutory notice process can affect the timetable. ASIC Form 2602 is used to provide the financial-assistance details under section 260B(5). ASIC states a lodging period of at least 22 days before the members' meeting for a company other than a public listed company, and at least 29 days for a public listed company. Form 2601 is the notice of intention under section 260B(6), and ASIC states a lodging period of at least 14 days before giving the financial assistance.
The practical question for the buyer is therefore not "does every share deal need a whitewash?" It is: does the target support contemplated by this financier engage Part 2J.3, which route is being relied on, and what does that do to the earliest date the security can be put in place? That is a question for the transaction solicitor once the financier's proposed security package is known.
Primary sources, read 3 September 2026: Corporations Act 2001, current compilation No. 147, compilation date 1 July 2026 / ASIC Form 2602, Notification of financial assistance details / ASIC Form 2601, Notification of intention to give financial assistance.
Is an asset sale really easier to finance than a share sale?
Everybody says it is, and nobody in a position to know publishes it. Australian advisers frequently describe asset sales as cleaner or easier to finance, and current Australian broker and legal commentary makes the market claim, but that is not the same thing as a published lender rule. What is much harder to find publicly is lender credit policy, regulator guidance or an industry standard saying that every asset sale is easier, that every share sale needs more equity, or that a fixed extra layer of diligence applies to every lender.
The useful answer is therefore mechanical rather than absolute. An asset sale places selected acquired assets in the buyer's entity. A share sale leaves those assets inside the target, so security may need to sit at both shareholder and target-company level. If the target supports acquisition debt, the financial-assistance question above may also arise. A share sale also leaves the target's historical liabilities inside the company being acquired. Those differences can create more work without proving a universal lender appetite rule.
| Question | What can be stated safely | Published by a lender, industry body, accounting body or regulator? | What remains financier-specific |
|---|---|---|---|
| Are asset sales commonly described as cleaner to finance? | Yes. Australian broker and adviser commentary now says so | No. Broker pages, law firm pages and Google's AI Overview only, and the AI Overview credits a finance broker's blog | Whether a particular lender treats the actual deal that way |
| Does an asset sale place acquired assets in the buyer's entity? | Yes, for the assets actually transferred | Not published as policy, but it is a mechanical fact about the transaction rather than a claim | How much value the financier attributes to each asset and what else it wants as security |
| Can a share sale need security at more than one level? | Yes. Security can sit over acquired shares and separately over target-company assets | Not published as policy. Mechanical, as above | The combination required on the specific transaction |
| Can target-company security engage financial assistance? | Yes. Part 2J.3 of the Corporations Act can apply where the company assists an acquisition of its shares or shares in its holding company | Yes. Corporations Act 2001, Part 2J.3, and the ASIC forms below | Which statutory route applies to the proposed support |
| Does a share sale retain the target's historical liabilities? | Yes. The liabilities remain liabilities of the company after ownership changes | Not published as policy. It follows from what is being bought | How the financier responds to risks found in diligence |
| Does every share sale require more equity or a deeper audit? | No public universal rule establishes that | No. No lender, industry body, accounting body or regulator publishes any position on it | Credit policy, transaction risk and the evidence requested by the actual financier |
From our broking, indicative
Published lender policy does not tell us that every share purchase is harder. Our own files do show where extra transaction work has tended to appear, which is a narrower and more useful observation.
- On share purchases we have placed, the information gathered has commonly extended beyond the buyer's position into the target's historical tax position, superannuation payment history and material contracts already on foot.
- That additional work has often added roughly two to four weeks to the transaction in our files, but the range varies materially with the quality of the target's records, the issues found and the timetable set by the parties.
- The recurring problems we have seen are unquantified liabilities inside the target, a key licence or contract affected by change of control, and records that do not support the diligence required for the transaction.
Indicative only, drawn from Switchboard broking files as at September 2026. This is one broker's deal flow, not a market statistic and not any lender's policy. Individual transactions vary, nothing here is a quote or an offer, and it is general information rather than financial advice.
The practical conclusion is simple: do not choose the legal structure because a website says one is "easier to finance". Let the accountant and solicitor settle the structure on the transaction's legal and tax facts, then give the proposed structure to the broker or lender early enough to test the actual funding, security and timetable.
Do you pay stamp duty on goodwill and business assets in an asset sale?
In three Australian jurisdictions you do not, and in Queensland you may, so the honest answer is that it depends entirely on where the business trades. Stamp duty is a tax that state and territory governments charge on certain documents and transactions, and as business.gov.au puts it, duty "varies between states and territories" (business.gov.au, Stamp duty, updated 11 July 2024). That variation is not a detail here. It is the whole answer, and it is why a single national rule of thumb is worse than useless on this question.
The most repeated piece of advice on Australian business purchases is that you pay duty on the goodwill, and in several jurisdictions that is simply wrong. Revenue NSW states that goodwill, described as the reputation and customer base of the business, is not dutiable, and neither is intellectual property such as trademarks, copyright, patents and domain names; what is dutiable is land, interests in land including commercial and retail leases, fixtures, and goods only where they are sold in an agreement that also includes other dutiable property (Revenue NSW, Business purchases, page last updated 31 August 2026). South Australia abolished duty on the transfer of a business on 18 June 2015 (RevenueSA, page modified 27 August 2026). The Northern Territory exempts intangible property including goodwill, business names and trademarks (Northern Territory Government, updated 17 June 2025).
Queensland runs the other way, and it is the row most likely to catch a buyer who has read the wrong page. The Queensland Revenue Office lists goodwill first among business assets and warns that "the existence of goodwill may make your transaction dutiable, so it is very important that you clarify this" (Queensland Revenue Office, Assessing if business asset transfers are dutiable, updated 27 September 2024). The correct instinct is not that goodwill is free of duty. It is that the answer is a jurisdiction question, every time.
| Jurisdiction | Is goodwill dutiable in an asset sale? |
|---|---|
| New South Wales | No. Goodwill and intellectual property are not dutiable. Land, interests in land, fixtures, and goods sold in an agreement that also includes other dutiable property are |
| Victoria | Partly. Goods used in the business are dutiable where the arrangement also involves an interest in land. Stock in trade, manufacturing materials, primary production goods and livestock are not. The State Revenue Office states no goodwill position on that page |
| Queensland | Yes. Goodwill is listed first among business assets and the Queensland Revenue Office states its existence may make the transaction dutiable |
| Western Australia | Position not published by the Western Australian revenue authority in a form that could be verified on 3 September 2026. Confirm with that authority |
| South Australia | No. Duty on the transfer of a business abolished on 18 June 2015 |
| Tasmania | Partly. Business goods are dutiable only in an arrangement that also includes other dutiable property such as land, a mineral tenement, or where the transfer is conditional on a new lease over the premises |
| Australian Capital Territory | Position not published by the Australian Capital Territory revenue authority in a form that could be verified on 3 September 2026. Confirm with that authority |
| Northern Territory | No. Intangible property including goodwill, business names, trademarks, registered designs, copyright and patented subject matter is exempt |
Scope and limits: these are the published positions of eight separate revenue authorities, each read directly on 3 September 2026 and quoted as written. Duty is a state and territory tax and treatments change. Two cells could not be verified from a primary source on that date and say so rather than guessing. Nothing here is a duty calculation, and the position in any particular transaction is a matter for the buyer's solicitor.
Sources, all read 3 September 2026: Revenue NSW, Business purchases (updated 31 Aug 2026) / State Revenue Office Victoria, Transfer of land and business and/or goods (updated 24 Aug 2026) / Queensland Revenue Office, Assessing if business asset transfers are dutiable (updated 27 Sep 2024) / RevenueSA, Stamp duty (modified 27 Aug 2026) / State Revenue Office Tasmania, Sales of business (updated 9 Dec 2024) / Northern Territory Government, Examples of duty and rates (updated 17 Jun 2025) / business.gov.au, Stamp duty (updated 11 Jul 2024).
Four one-line answers are worth pulling out of that table, because they are the ones people arrive looking for. In New South Wales, goodwill is not dutiable, and neither is intellectual property. In Queensland, goodwill is a listed business asset and the revenue office states its existence may make the transaction dutiable. In South Australia, duty on the transfer of a business was abolished on 18 June 2015. In the Northern Territory, intangible property including goodwill, business names and trademarks is exempt. Those four sit in the same country, on the same transaction, and produce opposite answers, which is the reason the national rule of thumb has to go. If you are working out how much of the price sits in the intangible component in the first place, start with what goodwill actually is.
What is landholder duty, and when does buying shares trigger it?
Landholder duty is duty charged on acquiring a significant interest in a company or unit trust whose land holdings exceed a threshold, rather than on a transfer of land. Buy the shares in a company that owns its premises and you may trigger duty even though no land has changed hands and no transfer has been registered. It is the single most surprising line item in a share purchase, and it is the reason a buyer can be told there is no stamp duty on the deal and then receive an assessment.
The difference between ordinary stamp duty and landholder duty is what the duty attaches to. Transfer duty is charged on property that actually moves. Landholder duty is charged on acquiring an interest in the entity that holds the property. In an asset sale, transfer duty looks at what is being transferred, which is the subject of the section above. In a share sale nothing is transferred at all, so transfer duty has nothing to bite on, and landholder duty exists precisely to close that gap. It is a form of duty rather than a separate tax, it is administered by the same state revenue authority, and until relatively recently most jurisdictions called the same regime land rich duty, which is still the phrase you will find in older material.
Two tests have to be met and both have to be met. The entity's land holdings in that jurisdiction must exceed the threshold, measured on unencumbered value, which means before any mortgage over the land is taken into account. And the interest you acquire has to be large enough to count, which the legislation variously calls a relevant acquisition, an interest acquisition or a significant interest. Both numbers move across the country, and the thresholds vary by a factor of four.
| Jurisdiction | Land holding threshold, unencumbered value | Interest that triggers it |
|---|---|---|
| New South Wales | $2 million or more in New South Wales land holdings | 50% private company, 20% private unit trust scheme for acquisitions on or after 1 February 2024, 90% public |
| Victoria | $1 million or more in Victorian land holdings. Duty phased in under a statutory formula between $1 million and $2 million | 20% private unit trust scheme, 50% private company or wholesale unit trust scheme, 90% listed company or public unit trust scheme |
| Queensland | $2 million or more in Queensland land holdings | 50% or more private landholder, 90% or more public landholder, being a listed corporation or listed unit trust |
| Western Australia | $2 million or more in Western Australian land assets, held directly or through a linked entity | 50% in a landholder not listed on the ASX or other prescribed financial market, 90% or greater in a listed landholder |
| South Australia | No minimum land value. The $1 million threshold test was removed from 1 July 2018. Applies to residential and primary production land holdings | At least a 50% prescribed interest |
| Tasmania | $500,000 or more in land holdings, including the land holdings of any linked entities | Not stated on the landholder provisions page. Confirm with the State Revenue Office |
| Australian Capital Territory | Nil duty payable up to $2,100,000, then a flat rate of $5.00 per $100, from 1 July 2026. Private companies and private unit trust schemes only | At least 50 per cent of the distribution of property from the landholder on the winding up |
| Northern Territory | $500,000 or more in land | 50% or more for unlisted entities, 90% or more for listed entities, reduced to 50% where the listing is or is part of a tax avoidance scheme |
Scope and limits: eight separate revenue authorities, each read directly on 3 September 2026 and quoted as written. Four of these pages were updated within the last four months and the Western Australian page is the oldest in the set. This table is not a duty calculation and this page does not calculate duty: the rate scale, the apportionment and the assessment are matters for the relevant revenue authority and for your solicitor on your numbers.
Sources, all read 3 September 2026: Revenue NSW, What is landholder duty (updated 27 May 2026) / State Revenue Office Victoria, Understanding landholder duty (updated 14 May 2026) / Queensland Revenue Office, Landholders and land-holdings (updated 8 Apr 2025) / Queensland Revenue Office, Relevant acquisitions (updated 5 Nov 2024) / Government of Western Australia, Landholder duty (updated 13 Dec 2023) / RevenueSA, Land Holder (modified 7 Feb 2025) / State Revenue Office Tasmania, Landholder provisions (updated 23 May 2023) / Australian Capital Territory Revenue Office, Landholder duty (modified 1 Jul 2026) / Northern Territory Government, Examples of duty and rates (updated 17 Jun 2025).
The row most likely to catch somebody is the 20 per cent one. In New South Wales and Victoria, a private unit trust scheme is caught at 20 per cent, against 50 per cent for a private company. That is the lowest trigger in the country, and it means a buyer taking a modest stake in a trust that holds land can cross it without ever thinking of the deal as a land transaction. If the business you are buying runs through a unit trust, that number is the first one to check, and the section further down on buying a business that runs through a trust is where that gets unpicked.
What does GST do to the cash you need on settlement day?
GST can change the cash you need on settlement day without changing the price at all, and the two structures sit differently for it. The Australian Taxation Office's GSTR 2002/5 states that a supply of all the shares in a company, where the shares are all that is supplied, is not itself a supply of a going concern. The share supply may instead be a financial supply. An asset sale can potentially qualify as a GST-free supply of a going concern where the statutory conditions are satisfied.
The funding consequence is about settlement cash. If GST is payable on amounts under an asset transaction, the buyer may need more cash available at completion than the headline price suggests. Whether the purchaser is entitled to an input tax credit, and when it is available, depends on the purchaser and the transaction, so do not treat later recovery through a business activity statement as automatic.
The going-concern position should therefore be identified before the funding amount is treated as final. Ask the accountant and solicitor what GST treatment the contract relies on, and ask the broker what happens to the settlement contribution if that treatment changes. The mechanics are covered separately in the going-concern guide.
Primary source, read 3 September 2026: Australian Taxation Office, GSTR 2002/5, including paragraphs 196 to 199 on companies and going concerns.
How do you work out what you are buying when the business runs through a trust?
You buy something other than shares, and working out which legal interests actually change hands is the first job rather than a detail. Do not force a trust transaction into the words "asset sale" or "share sale" until that is settled. An Australian business can operate through a discretionary trust or unit trust with a corporate trustee, and a deal can involve trust units, shares in the corporate trustee, control or appointor rights, trust assets, or a combination of those.
| Possible transaction | What changes | Funding question |
|---|---|---|
| Units in a unit trust | The buyer acquires an interest in the trust while the trust structure continues to hold the business assets | Which entity can grant security over the trust assets, and does the unit acquisition trigger duty or landholder rules? |
| Shares in a corporate trustee | Ownership or control of the trustee company changes | Do not assume the trustee company's shares alone represent the beneficial interest in the business; read the deed and the wider transaction |
| Trustee, appointor or control rights | Control rights under the trust deed change | The deed may affect who can grant security and what consents or appointments are required |
| Business assets sold out of the trust | Selected assets move from the trust structure into the buyer's entity | The funding then follows the asset-transfer mechanics, including PPSR, consent, GST and duty questions |
| A combination | More than one legal step occurs | Map each step separately before the loan amount, security and duty position are treated as final |
Duty follows the legal transaction rather than the shorthand label. That matters particularly where trust units or interests in a landholding trust are acquired. As the landholder table above shows, New South Wales and Victoria use a 20 per cent significant-interest threshold for a private unit trust scheme, compared with 50 per cent for a private company in those jurisdictions.
The buyer's first question should therefore be factual: are we acquiring assets, units, trustee-company shares, control rights, or several of those together? Until that is answered, the financier cannot sensibly map the borrower and security package, and the solicitor cannot sensibly confirm the duty treatment. The document set that follows is covered in the acquisition lender document-pack guide.
What transfers, and when does change-of-control consent matter?
Almost nothing needs assignment in a share sale, because the company remains the contracting party, and almost everything does in an asset sale. That does not make consent irrelevant in a share sale. Leases, licences, customer agreements, supplier contracts and existing finance documents can contain change-of-control provisions requiring notice, approval or consent even though the legal entity itself does not change.
In an asset sale, the counterparty often does change. Contracts, leases and licences that need to move to the buyer may therefore require assignment, novation, reissue or consent. Those steps matter to funding because a financier can make completion conditional on key operational rights being in place when the loan settles.
| Item | Asset sale | Share sale | Funding consequence |
|---|---|---|---|
| Customer and supplier contracts | May need assignment, novation or replacement | Usually remain with the same company, subject to change-of-control terms | Key consents or notices can sit on the settlement critical path |
| Commercial lease | Often needs assignment or a new lease, commonly involving the landlord | The tenant remains the same company, but a change-of-control clause may still apply | Premises access can be a condition to completion |
| Industry licences and permits | May need transfer, reissue or a new application | May continue with the entity, but ownership-change rules can still apply | A licence that is not available at completion can stop the operating assumptions behind the finance |
| Employees | Employees who move may fall within the Fair Work transfer-of-business rules if the statutory conditions are met | The employing company generally remains the employer because the entity itself has not changed | Service recognition and accrued entitlements can affect the deal economics |
| PPSR registrations | Relevant registrations affecting acquired assets may need release or other treatment | Registrations against the target remain because the target remains the same grantor | The new financier needs to know which security interests remain, rank or must be released |
| Trading and tax history | Generally remains with the seller's entity | Remains inside the target company | The share-sale diligence reaches into the entity's history |
The Fair Work rules need care. In a share sale there is ordinarily no change of employer because the company remains the employer. In an asset transaction, employees who move to the buyer may fall within the Fair Work transfer-of-business rules where the statutory conditions are satisfied. Fair Work states that a new employer must recognise prior service for most entitlements, while some entitlements may be treated differently depending on the relationship between the employers and the circumstances.
A PPSR search is only the first step. If the assets being purchased, or the target company in a share sale, are subject to existing security, settlement needs to identify what must be paid out, released, subordinated or otherwise dealt with so the new financier receives the security position it approved. A PPSR registration does not tell the buyer the exact payout amount. That comes from the secured party and the settlement mechanics.
Primary sources, read 3 September 2026: Fair Work Ombudsman, Employee entitlements on a transfer of business / Personal Property Securities Register, Searching / PPSR, Do an organisation search.
Where the premises form part of the deal, the property and lease axis is covered separately in the guide to buying a business with property versus without it.
What liabilities remain inside the company in a share sale?
In a share sale, the target company's existing liabilities remain liabilities of that company after settlement. The buyer does not magically become the legal debtor for every obligation, but by acquiring the company the buyer acquires the economic risk attached to those obligations. That is why diligence in a share purchase reaches into the target's history rather than stopping at a schedule of assets.
Examples can include tax liabilities, employee and superannuation exposures, disputes, claims, contractual obligations and compliance problems. The point is not that every target contains hidden liabilities. It is that a share buyer acquires the entity in which those liabilities would sit if they exist.
| Exposure found or investigated | Why the buyer cares | Possible transaction response |
|---|---|---|
| Tax liabilities | They remain liabilities of the target company after ownership changes | Due diligence, warranties, indemnities and price treatment as advised by the solicitor and accountant |
| Employee or superannuation exposures | They can represent cash obligations inside the company being acquired | Quantification, completion accounts, price adjustment, warranty, indemnity or retention depending on the contract |
| Disputes or claims | The economic risk remains with the company if the claim later crystallises | Disclosure, warranties, specific indemnities, retention or other negotiated protection |
| Debt, cash and working-capital position | The target's actual position at completion may differ from the accounts used when the price was first discussed | Completion accounts or another agreed price-adjustment mechanism |
| Existing secured debt | The new financier needs to know what security remains against the target and what must be released | Payout figures, releases, refinancing, priority arrangements or other settlement steps |
A warranty is a contractual statement about the company. An indemnity can allocate a specified exposure. Completion accounts can adjust the final price to an agreed completion position. A retention or escrow can hold back part of the consideration. Which mechanisms belong in a particular acquisition, how large they should be and how long they should run are legal and commercial questions for the transaction advisers.
The funding link is direct: an exposure that changes the price, creates a retention, requires a payout or leaves debt inside the target can change the amount of cash or debt required at completion. That is why material diligence findings should reach the broker or lender before the final settlement figure is treated as fixed.
What happens if the structure changes after finance assessment has started?
Tell the lender or broker as soon as the structure changes. Moving from an asset sale to a share sale, or the reverse, can change the borrower, the acquired property, the security package, the diligence scope, PPSR position, guarantees, GST assumptions, duty treatment, consents and settlement conditions. Whether the financier treats that as an amendment, reassessment or a new application is lender-specific.
An existing approval or indicative approval should therefore not be assumed to survive unchanged. The financier needs the transaction it originally assessed compared with the transaction now being proposed.
| Assessment assumption | What can change | What the buyer should do |
|---|---|---|
| Borrower | The acquisition vehicle or entity owing the debt may be different | Confirm the final borrower and ownership structure immediately |
| Security | Security may move from acquired assets to shares, target-company assets, guarantees or another combination | Give the financier's proposed security package to the transaction solicitor |
| Diligence and valuation basis | The lender may now be assessing an entity with history rather than a schedule of transferred assets, or the reverse | Ask which reports or assumptions need updating |
| Financial assistance | Target-company support for acquisition debt may become relevant in a share purchase | Ask the solicitor whether Part 2J.3 is engaged and what timetable follows |
| PPSR and existing debt | The relevant grantor, assets and release requirements can change | Update the security search and settlement-release plan |
| GST and duty | The going-concern position, transfer-duty question or landholder-duty question may change | Reconfirm the settlement cash with the accountant and solicitor |
| Consents and contract dates | Assignments may be replaced by change-of-control checks, or the reverse | Revisit the finance-condition and settlement timetable before assuming the old dates still work |
If a deposit has already been paid or a finance condition is running, the legal consequences of the contract and its dates belong with the solicitor. From the funding side, the useful action is immediate disclosure: give the broker or lender the revised transaction documents and ask exactly which approval assumptions, documents and conditions need to be refreshed.
If the deal has changed while finance is underway, you can work through the funding against the transaction that now exists, not the one originally proposed.
What can still change the cash required at settlement and after it?
The purchase price is not necessarily the amount the buyer needs available on settlement day. Existing secured debt, payout and release mechanics, stock adjustments, completion accounts, debt and cash adjustments, GST, duty, retentions, escrow and vendor finance can all change the amount that actually has to move at completion.
| Moving part | What can happen | Funding question to answer before settlement |
|---|---|---|
| Existing PPSR security and lender debt | Relevant secured debt may need payout, release, refinancing, subordination or another agreed treatment | Which registrations matter, what is the payout figure, and what evidence of release does the incoming financier require? |
| Debt and cash adjustments | The final company position may be trued against the agreed transaction formula | What amount is actually payable at completion, and when will that number be known? |
| Completion accounts or working-capital target | The price can move after measuring the target's actual completion position | Is the loan sized to the headline price or to the realistic completion payment? |
| Stock or inventory adjustment | Stock counted at completion can move the amount payable | Who funds an upward adjustment and where is the buffer? |
| GST | An asset transaction may require GST cash if the expected treatment does not apply | Has the accountant confirmed the contract treatment and the cash consequence? |
| Transfer duty or landholder duty | Duty can be a separate cash requirement even though the purchase price itself has not changed | Has the solicitor confirmed which duty regime applies and when payment is required? |
| Retention or escrow | Part of the price may be held back rather than paid directly to the seller | Does that reduce the day-one cash requirement or alter how the lender expects funds to be applied? |
| Vendor finance or deferred consideration | Part of the price is paid later rather than fully in cash at completion | Has the senior financier approved the structure, ranking and repayment profile? |
| Post-settlement working capital | The acquired business still needs cash for wages, suppliers, stock and the first trading cycle under new ownership | What cash remains in or beside the business after the seller, duty and transaction costs are paid? |
What happens the morning after settlement?
A fully funded purchase price is not the same thing as a fully funded business. After completion, the new owner may still need to fund payroll, suppliers, stock, insurance, tax obligations and the gap between paying expenses and collecting the first customer cash under new ownership. The acquisition model should therefore show both the money required to complete and the working-capital buffer left afterwards.
This is where the structure page hands back to the broader acquisition-finance question. The guide to getting a loan to buy a business covers the wider funding stack, including the operating cash the business needs after settlement. Where part of the price is being left with the seller, see how vendor finance fits beside senior acquisition debt.
Asset sale or share sale: who decides what, and what do you ask them?
The structure is a legal and tax decision for the buyer's solicitor and accountant, while the broker or lender maps what the chosen structure does to the funding. Keeping those roles separate avoids a common failure: asking a finance question of the lawyer, a duty question of the broker, or treating a generic web answer as a transaction-specific tax conclusion.
| The question | Who answers it | What they need from you |
|---|---|---|
| Which structure leaves us better off after tax, on these facts | Your accountant | The company's financials and your own tax position, not a general rule from a website |
| Is goodwill dutiable in the state this business trades in | Your solicitor, with that state revenue authority as the source | Where the business trades and what is on the asset schedule |
| Does this share purchase trigger landholder duty | Your solicitor, with that state revenue authority as the source | Whether the entity holds land, its unencumbered value, and the size of the interest you are taking |
| What are we actually buying if the business runs through a trust | Your solicitor, reading the trust deed | The trust deed itself, early, before anything is priced |
| What is actually inside the target that we would take on | Your solicitor, running the diligence | Access to the company's records, and time to read them |
| Does the security our financier wants engage the financial assistance provisions | Your solicitor | The term sheet or the financier's security requirements |
| Is a going concern position available, and what if it fails | Your accountant, with your solicitor drafting it into the contract | The draft contract and the asset schedule |
| What does each structure do to what we can borrow, and when it can settle | Your broker | The direction your advisers are leaning and the contract dates |
For funding, the structure changes five practical things: where security can sit, what may need to be reassessed, which consents or statutory steps sit on the settlement path, what liabilities remain inside the target, and how much cash is required to complete and operate afterwards.
| Funding question | Asset sale | Share sale |
|---|---|---|
| What the buyer acquires | Selected business assets | Shares in the target company |
| Where operating assets sit after completion | In the buyer's acquiring entity for assets actually transferred | Inside the target company, unchanged by the share transfer |
| Where security can sit | Over acquired assets and any other agreed security | Over acquired shares, target-company assets and any other agreed security |
| Historical liabilities | Generally remain in the seller's entity unless specifically assumed or transferred | Remain liabilities of the target company the buyer now owns |
| Contracts and licences | More likely to need transfer, assignment, novation or reissue | Usually remain with the same entity, subject to change-of-control provisions |
| Duty | Transfer-duty rules follow the dutiable property being transferred | Landholder-duty rules may apply if the target holds enough land and the acquired interest meets the relevant test |
| GST | Asset sale may potentially qualify as a GST-free going concern if the statutory conditions are satisfied | Sale of shares alone is not itself a supply of a going concern; the share supply may be a financial supply |
| Settlement cash | Can move with duty, GST, stock, payouts and other completion adjustments | Can move with landholder duty, debt and cash adjustments, completion accounts, retention, releases and deferred consideration |
Once the structure is settled, the broker can model the transaction the buyer will actually fund: the borrower, security, cash contribution, settlement adjustments and working-capital buffer. If that is where you are, work through the funding on your purchase. The broader mechanics sit in the acquisition-finance guide, and the wider picture sits across business finance for owners.
The funding difference between an asset sale and a share sale is not a slogan about one being easier. It is a chain of mechanics. An asset sale moves selected assets into the buyer's entity. A share sale leaves the operating assets and historical liabilities inside the target, so security can sit at both shareholder and target-company level, change-of-control clauses can matter, and target support for acquisition debt can raise the Corporations Act financial-assistance question. Duty and GST can also change the cash required at completion, while completion accounts, releases, deferred consideration and working capital can move the final funding need after the headline price has been agreed.
Key takeaway: tell the financier the transaction structure early, map the security and statutory steps before the finance date, and model both the cash needed to settle and the working capital left for the business afterwards.Frequently Asked Questions
In an asset sale the buyer acquires selected business assets into its own entity and the seller keeps the selling entity. In a share sale the buyer acquires the shares in the company, so the company keeps its assets, contracts, liabilities and history. For funding, that changes where security can sit, how far diligence reaches, which consents matter, and what duty or settlement cash may be required.
For a buyer, an asset sale can create more transfer work because contracts, leases, licences and selected assets may need assignment, novation, consent or reissue. Employee transfer rules may also apply, and duty can arise on dutiable property in some jurisdictions. The trade-off is that liabilities left inside the seller's entity generally do not move merely because selected assets are purchased.
There is no universal answer. Stock sale is the United States term for what Australian transactions usually call a share sale. An asset sale can leave the seller's entity history behind, while a share sale keeps the operating company intact. The better structure depends on legal and tax issues, while the funding consequence is mechanical: the two structures can require different borrowers, security, diligence, consents and settlement cash.
No. They are different transaction structures. A stock sale, called a share sale in Australia, transfers ownership of shares in the company. An asset sale transfers identified assets from the seller into the buyer's entity. A transaction can contain both kinds of steps, but each step has its own legal, tax, duty and security consequences.
Landholder duty is duty that can arise when a person acquires a significant interest in a company or unit trust that holds land above the relevant jurisdiction's threshold. It can therefore apply to a share or unit acquisition even though no land title is transferred. The land-value threshold and the interest that counts vary across Australian states and territories.
Transfer duty generally looks at dutiable property that is transferred. Landholder duty can instead apply when a buyer acquires an interest in an entity that holds land. In a business asset sale the duty question follows the assets being transferred. In a share or unit acquisition the separate landholder rules may matter if the entity holds enough land and the interest acquired is large enough.
There is no single Australian amount. The calculation depends on the jurisdiction, the unencumbered value of the entity's relevant land holdings, the interest acquired and that jurisdiction's duty rules. The threshold table on this page is a screening tool only; the actual assessment and calculation should be confirmed against the relevant revenue authority and by the transaction solicitor.
It depends on the jurisdiction and on what else is transferred. Revenue NSW states that goodwill and intellectual property are not dutiable on its business-purchases page, South Australia abolished duty on business transfers in 2015, and the Northern Territory exempts specified intangible property. Queensland expressly lists goodwill as a business asset that may make a transaction dutiable. Check the state or territory for the actual deal.
Yes. A private-company share acquisition can be financed as a business acquisition. The important difference is that the trading assets stay inside the target company. A financier may therefore consider security over the acquired shares, security granted by the target over its own assets, guarantees or other security. If the target guarantees or secures acquisition debt used to buy its shares, the Corporations Act financial-assistance provisions may also need to be considered.
Australian advisers commonly describe asset sales as cleaner or easier to finance, but that is not the same as a published universal lender rule. What can be stated without guessing at lender policy is that the structures create different security, diligence and settlement mechanics. A share purchase can require security at both shareholder and target-company level and may raise a financial-assistance issue if the target supports acquisition debt.
Security can sit at more than one level. The buyer can grant security over the shares it acquires. The target company may separately grant security over its own business assets, and guarantees or additional property security can sit beside those arrangements. The exact combination is financier-specific. Target-company guarantees or security for acquisition debt may engage Part 2J.3 of the Corporations Act.
Yes. A PPSR search can identify registered security interests over personal property or against an organisation. In an asset sale, relevant registrations over assets being acquired may need to be released or otherwise dealt with at settlement. In a share sale, registrations against the target company remain because the company remains the same grantor. A search identifies registrations, not the exact payout amount, so settlement also needs the release and payout mechanics for relevant secured debts.
You buy something other than shares, and working out what changes hands is the first job rather than a detail. Where the business runs through a trust with a corporate trustee, the trustee company commonly holds nothing except the role of trustee, so acquiring its shares may not deliver the business. Depending on the deed, the transaction can instead involve units in a unit trust, a change of trustee and appointor rights, or a sale of trust assets into the buyer's entity. Duty follows the substance rather than the label, and Australian revenue authorities consider whether there has been a change in beneficial ownership, so a unit transfer can be dutiable where a share transfer in similar circumstances is not. Read the trust deed with your solicitor before anything is priced. More on this page.
Commonly because of their own after-tax outcome, and because it leaves them with nothing to wind up. In an asset sale the proceeds land inside the selling entity and then have to be dealt with, and that entity may remain in existence afterwards. In a share sale the seller disposes of the shares and exits ownership of the company. The actual tax position depends on the seller, the entity and the assets, and it is a question for their accountant rather than a general rule. For a buyer the useful point is that the structure is very often chosen before a buyer is found, so the question is rarely which structure to pick. It is what to ask for in exchange for accepting the one on offer. More on this page.
In a share sale there is no transfer, because the employer is the company and the company has not changed, so employment continues. An asset sale is different: it can be a transfer of business, and the Fair Work Ombudsman states that a new employer has to recognise an employee's service with the old employer for most entitlements, including sick and carer's leave, requests for flexible working arrangements and parental leave. It also states that redundancy, annual leave, long service leave, unfair dismissal and notice of termination may not be recognised where the two employers are not associated entities. More on this page.
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